An Introduction to the Link Between the Chinese Housing Market and Systemic Financial Risk

The Chinese housing system has undergone a huge transformative phase in 1998, from the planned welfare housing allocation system to the commercialization of housing. After the introduction of monetary housing distribution, real estate became a pillar of China’s economy. However, rapid economic growth and urbanization have magnified the investment attributes of housing, driving up prices and creating social and economic challenges, such as housing affordability and widening wealth inequality. The disparity in housing resource allocation has fueled a growing housing bubble, which is associated with the systemic financial risk. The post-pandemic period has brought new economic challenges, with weak domestic demand and an unprecedented stagnation in the housing market. Therefore, this introduction aims to reveal the development of China’s housing market over the past 27 years, analyze the key factors that driving property price inflation, and explore potential policy-driven strategies to mitigate systemic financial risks.